By Stephen M. Silverman
Updated March 05, 2004 10:15 AM

Martha Stewart has been found guilty of all four counts against her — including conspiracy, making false statements and obstruction of justice, a jury in the federal case decided Friday afternoon in New York.

Stewart’s former Merrill Lynch stockbroker, Peter Bacanovic, was convicted of perjury and obstruction, though he was cleared on one count of filing false documents.

Stewart and Bacanovic both could face fines and prison terms (for Stewart, up to 20 years) when they are sentenced on June 17.

The verdicts by the eight-man, four-woman jury came after three days of deliberations. As they were read, Stewart stood stoically while her daughter, Alexis, who was seated behind her, cried and dropped her head into her hands.

In a statement on her Web site, Stewart vowed to “appeal the verdict and continue to fight to clear my name.”

“I am obviously distressed by the jury’s verdict but I continue to take comfort in knowing that I have done nothing wrong,” she said. “I believe in the fairness of the judicial system and remain confident that I will ultimately prevail.”

As Stewart left the courthouse with Alexis, throngs of supporters cheered and clapped. “Don’t worry, Martha,” one called out.

Stewart, 62, was charged with conspiracy, obstruction of justice and two counts of making false statements. The combined charges against her carry a penalty of up to 20 years in prison, but legal experts speaking on TV after the conviction seemed to concur that Stewart can be expected to serve 10 months to two years in prison.

In addition, the SEC could revoke her seat on the board of Martha Stewart Living Omnimedia and possibly force her to step down as chief creative officer of the media company.

Bacanovic, 41, was charged with one count of making false statements, making and using false documents, conspiracy, perjury and obstruction of justice — charges that carry a prison term of up to 25 years.

Bacanovic’s attorney confirmed that his client will appeal, “and will be vindicated in the end.” Stewart’s attorney, Robert Morvillo, said, “We are disappointed, (but) we look at this as losing the first round.” He said, “The conviction will be reversed.”

Ultimately, what the case boiled down to was fibbing and trying to cover up. As federal prosecutor David Kelly told reporters: “Whether you’re John Q. Public, Martha Stewart or Peter Bacanovic, we are going to go after you if you tell these lies.”

Speaking outside the courthouse after the verdict was announced, juror Chappell Hartridge told the press that it made no difference to the jury that Stewart never took to the stand to defend herself. He said the decisions were reached based solely on the evidence presented.

As early as Thursday, there were reports that jury members, in sending what were considered intelligent questions to U.S. District Judge Miriam Goldman Cedarbaum, were focusing on testimony from Stewart’s assistant, Ann Armstrong, as they considered whether there was sufficient evidence to consider a perjury charge.

In response, the jurist said the testimony of Armstrong and a telephone message log she kept are enough to meet the high standards of evidence to convict a defendant of perjury.

Shares of Martha Stewart Living Omnimedia were halted on the New York Stock Exchange just before the verdict was read, after spiking to a 52-week high of $16.27 in the minutes leading up to it. By the close of the market, their prices had plunged 23 percent, to close at $10.86.

As for Stewart, she’s expected report on Monday to the probation office of New York, where her court-appointed probation officer will do a pre-sentencing evaluation of the homemaking star, including her finances.

With reporting by Sharon Cotliar